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POSTAL RATE AND FEE CHANGES, 1997
i
Docket Nlo. R97-1
RESPONSE OF UNITED STATES POSTAL SERVIICE
WITNESS CRUM TO INTERROGATORIES
OF
UNITED PARCEL SERVICE
(UPS/USPS-T28-12-16)
The United States Postal Service hereby provides responses
to the following
interrogatories
of United Parcel Service:
of witness Crum
UPS/USPS-T28-12-16,
filed on August 4, 1997
Each inteirrogatory
is stated verbatim and is followed by the response.
Respectfully
submitted,
UNITED STATES POSTAL
By its attorneys:
Daniel J. Foucheaux, Jr.
Chief counsel, Ratemaking
Scott L. Reiter
475 L’Enfant Plaza West, S.W.
Washington, D.C. 20260-I 137
(202) 268-2999; Fax -5402
August 14, 1!397
SERVICE
U.S. POSTAL SERVICE WITNESS CHARLES L. CRUM
RESPONSE TO INTERROGATORIES
OF UNITED PARCEL SERVICE
UPS/USPS-TZO-12.
Please refer to your Exhibits D and F and explain in detail the
processes (Unloading, Dumping, etc.) for which you calculate the costs and how these
processes relate to the processing of parcels in a BMC.
RESPONSE
Exhibit F is generally based on the parcel post models described by ‘witness Daniel in
USPST-29
which are an update of the models presented by witness Byrne in Docket
No. R84-1. Two lines in Exhibit D are less straightfonvard
and I will ;attempt to describe
those more fully below.
Origin BMC - For the nonpresorted
pieces from colitainers,
machinable pieces, this represents any dumping of
sorting of sacks, or shaking out of any pieces from sacks that is
necessary along with the primary parcel sorting machine sort and ‘sweep’ (removing full
containers from the run-out area). For the nonpresorted
nonmachinable
pieces, this
represents the origin primary NM0 sort. For the BMC presorted pieces, this represents
a crossdock of either a ‘gaylord’ (for machinable pieces) or a pallet (for nonmachinable
DBMC Sort - For nonpresorted
machinable pieces, this represents the dumping of
pieces from a Postal Pak along with the necessary proportion of sods on the primary
and secondary parcel sorting machines.
For BMC presorted pieces, this represents i:he
dumping of pieIces from a ‘gaylord’ along with a sort on both the primary and secondary
parcel sorting Imachines. For nonmachinable
pieces, the paths merge at that point
making the costs identical (and thus unnecessary
and BMC presorted pieces
to show) for both ihe nonpresorted
U.S. POSTAL SERVICE WITNESS CHARLES Lo CRIUM
RESPONSE TO INTERROGATORIES
OF UNITED PARCEL SERVICE
UPS/USPS-TZH-13.
Please explain why Basic Function “Incoming” c:osts are excluded
from the FY 1996 BMC Processing costs ($23,977,000) you use in your Exhibit C.
RESPONSE
The number I u:se in Exhibit C is an estimate of mail processing labor costs at origin
facilities that DBMC pieces will avoid. Our costs are collected by facility.
‘Incoming’
mail IS defined as mail received by a postal facility, most commonly for distribution
delivery withtn the delivery area of the receiving facility.
and
If I do not exclude ‘incoming’
costs, I would overstate my cost savings estimate by including costs incurred by pieces
traveling from the BMC to the delivery unit as opposed to only from the originating
office to the BMC.
post
U.S. POSTAL SERVICE WITNESS CHARLES L. CRIJM
RESPONSE TO INTERROGATORIES
OF UNITED PARCEL SERVICE
UPS/USPS-T28-14.
Refer to Exhibit G, Part 1.
(a)
Confirm that you Include the costs of crossdocking and loading
pallets at the SCF in your calculation of After-SMC Downstream Costs of DSCF
Prepared Parcel Post.
Confirm that you do not include the costs of unlo,ading pallets at
(b)
the SCF in Part I of your calculation of After-EIMC Downstream Costs of DSCF
Prepared Parcell Post.
Will the pallets be unloaded at the SCF? If so, why are those costs
Cc)
not included?
RESPONSE
a.
I include the costs of crossdocking
and loading properly prepa,red sacks and
GPMCs, not pallets
b.
Confirmed
C.
Mailers will be required to unload their properly prepared DSC’F pieces to qualify
for the DSCF rate.
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r
‘U.S. POSTAL SERVICE WITNESS CHARLES L. CRLJM
RESPONSE TO INTERROGATORIES
OF UNITED PARCEL SERVICE
UPS/USPS-T28-15.
Please refer to Exhibit A of your direct testimony.
Please
confirm that your calculation of Window and Acceptance
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Costs avoided by DBMC Parcel Post includes costs associated with Ejasic Function
“Incoming” activities. If not confirmed, please explain.
Please confirm that your calculation of Non-BMC Mail Processing
04
Costs avoided by DBMC Parcel Post (Exhibit C) excludes costs associated with Basic
Function “Incoming” activities. If not confirmed, please explain If coInfirmed, please
explain why this exclusion is appropriate when calculating Non-BMC Mail Processing
Costs avoided by DBMC Parcel Post, but is not appropriate when making the same
calculation for VVindow Service Costs avoided by DBMC Parcel Post.
cc:1 Please confirm that your calculation of Window Servtce and
Platform Costs in Exhibit A also includes costs associated with Basic Function “Other”
activities. If not confirmed, please explain.
Please confirm that Window Service Costs do not include any
(4
costs associated with Basic Function “Transit” activities. If not confirmed, please
explain.
Please explain what Window Service Parcel Post Functions would
(e),
be recorded as Basic Function “Incoming” and “Other.”
Please explain how DBMC Parcel Post avoids the activities (and
(f)
costs) associated with Window Service Basic Function “Incoming” anld “Other”
activities.
RESPONSE
a.
Not confirmed.
By going to the disk which accompanies
Library Reference H-
144, you can see that every single tally with a ‘yes’ (code #2) for Operation 07 Platform Acceptance
corresponds
to a basic function tally of ‘outgoing’ (code #l)
Therefore there1 are no ‘incoming’ costs at all included in the platform’ acceptance
section of Exhibit A.
The Postal Service does not routinely develop Window Service (Cost Segment 3.2)
costs by basic function like it does for Mail Processing (Cost Segment 3.1). As I
U.S. POSTAL SERVICE WITNESS CHARLES L. CF!UM
RESPONSE TO INTERROGATORIES
OF UNITED PARCEL SERVICE
discussed in my response to UPS/USPS-T28-l(c),
I know that costs similar to what
might be described as ‘incoming’ exist for parcel post Window Service and my analysis
is cognizant of that. I am comfortable with my assumption that DBMC and non-DBMC:
pieces incur equivalent costs at the destination delivery unit and that my analysis fairly
estimates the Window Service and platform acceptance cost differenice between DBMC
and non-DBMC parcel post.
b.
Confirmed.
As discussed in my response to UPS/USPS-T2843
above, not
excludmg Basic: Function ‘incoming’ costs in my mail processing cost analysis in Exhibit
C would result in an overstatement
of the estimate of DBMC savings.
That analysis is,
completely different from my analysis of Window Service and platform acceptance
costs in Exhibit A. The Window Service analysis divides Cost Segmc?nt 3.2 by tallies
based on the presence of an endorsement
indicating whether the piece paid the DBMlC
rate or not. If one accepts the simple assumption that whether a given parcel was
entered as DBMC or not has no impact on its cost or likelihood of pick-up at the
destination delivery unit, the basic function has little relevance to my analysis.
one did not accept that assumption,
Even if
those costs are so small as to make the difference
all but irrelevant.
C.
Not confirmed.
As discussed in (a) above, there are no basic function ‘other’
costs in platform acceptance (operation 07) and the Postal Service has not developed
Window Service costs by basic function in this docket.
U.S. POSTAL SERVICE WITNESS CHARLES L. CRUM
RESPONSE TO INTERROGATORIES
OF UNITED PARCEL SERVICE
d.
Confirmed.
e.
Please see my response to (a) above.
f.
I can not explain how DBMC Parcel Post avoids the activities (Iand costs)
See responses to (a) and (c) above,
associated with Window SetvIce Basic Function ‘Incoming’ and ‘Other’ because I do
not state or imply that it does. Please see my responses to (a) above and UPSIUSPST-28-l.
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U.S. POSTAL SERVICE WITNESS CHARLES L. CF!UM
RESPONSE TO INTERROGATORIES
OF UNITED PARCEL SERVICE
UPS/USPS-T28-16.
Please refer to page 5 of your direct testimony.
Please define the average size of a General Purpose Mail
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Container.
Please explain the difference between a Gaylord and a General
RI)
Purpose Mail Container.
Please discuss whether non-machinable parcels can be delivered
(c)
in pallets or Gaylords and whether thts WIII affect their eligibility for dropshipment
discounts.
RESPONSE
a.
Length = 42”, Width = 29, Height = 69”
b
‘Gaylords’ are fully described in my response to UPS/USPS-T28-7.
GPMCs are
fully described in LR-H-133 beginning at page 13. Basically, ‘gaylorcls’ are cardboard
boxes while GPMCs are metal cages with wheels
C.
To be consistent with my costing assumptions,
presented in GPMCs.
nonmachinables
must be
Other containers would create different cost imtplications.
There
is also a concern about the ability of various delivery units to accept mail on pallets,
‘gaylords’, or other containers that can not be easily moved. As discussed in the
testimony of witness Daniel (USPS-T-29),
parcels generally arrive at delivery units
bedloaded or in either wheeled containers or in sacks
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DECLARATION
I, Charles L. Crum. declare under penalty of perjury that the foregoing answers
are true and cornsct, to the best of my knowledge, information, and belief.
Dated:
14
&f6u5?
1497
CERTIFICATE
OF SERVICE
I hereby certify that I have this day served the foregoing document
participants
upon all
of record in this proceeding in accordance with section ‘I2 of the Rules of
Practice.
Scott L. Reiter
475 L’Enfant Plaza West, S.W.
Washington, D.C. 20260-l 137
August 14, 1997
.